WASHINGTON: The International Monetary Fund (IMF) on Saturday approved the extension of $320 million in credit to Afghanistan to help the country navigate the health crisis caused by the Covid-19 pandemic and a post-pandemic economic recovery.
The 42-month arrangement will help the Central Asian country “anchor economic reforms and catalyse donor financing”, the fund said in a statement.
The latest amount disbursed is equivalent to 80 per cent of Afghanistan’s quota and will “support the authorities’ economic reform programme” aimed at preserving macroeconomic stability and reversing the financial devastation caused by the pandemic.
“The Covid-19 pandemic continues to weigh heavily on Afghanistan’s economy and livelihoods. The authorities’ determined response and expedient donor support have prevented a humanitarian crisis. However, the pandemic has set back progress toward self-reliance,” said Mitsuhiro Furusawa, deputy managing director and acting chair of the IMF executive board.
Kabul will receive around $115m in immediate funding, with the remainder to be phased in over the period of the IMF programme, pending semi-annual reviews. The extended credit facility will also help preserve Afghanistan’s “macro-financial stability and support sustainable growth and poverty reduction”, Mr Furusawa added.
Domestic revenue mobilisation, underpinned by tax and customs administration reforms, will be key to protecting development spending and will form the basis for a stronger social safety net, he added. In May, the IMF extended $220m in emergency assistance for Afghanistan to help the country cope with the economic fallout from the coronavirus pandemic.
The amount was directed to help Afghan authorities plug an urgent balance of payments gap in 2020 and fund pandemic-related spending on health and social relief.
Afghanistan’s gross domestic product in real terms is expected to shrink 5 per cent this year, according to the Washington based lender, before rebounding by 4 per cent next year. The Central Asian state had a total of 42,033 Covid-19 cases, with 1,556 deaths as of Saturday.
